The proposal by the European Commission poses material risks to India’s steel exports amid a weak external environment. In the absence of a trade arrangement, the proposed EU measures, coupled with the impending implementation of CBAM, could pose a dual challenge for Indian steel exporters, making exports to the EU increasingly tougher going forward.
- On October 7, 2025, the European Commission proposed capping tariff-free steel imports at 18.3 million tonnes (mmt) annually, a 47% reduction from 2024 levels, while also doubling the out-of-quota duty to 50%. The proposal is intended to replace the existing safeguard mechanism expiring in June 2026, underscoring the EU’s increasing protectionist approach aimed at supporting domestic producers.
- Despite the prevailing safeguards, EU steel imports have remained elevated at 25-30 mmt annually (~18-20% of annual demand) over the past decade. The tighter import regime is aimed at improving industry capacity utilisation (current 60-65%) and enhancing the financial flexibility of EU mills to invest towards decarbonisation objectives.
Exhibit: Trend in global steel capacity and demand
Source: OECD, ICRA Research
